Malaysia Motor Insurance Market - Growth, Trends, Covid-19 Impact, and Forecasts (2023 - 2028)

Malaysia Motor Insurance Market - Growth, Trends, Covid-19 Impact, and Forecasts (2023 - 2028)

Malaysia is one of the leading global Islamic Capital Market (ICM) hubs. Based on the facts from the Islamic Financial Services Board (IFSB), Malaysia has the major Islamic banking assets outside of the Middle East in the third quarter of 2021 (3Q2020). IFSB also pointed out that Malaysia remained one of the concentrations of Islamic Fund Assets, constituting 28.3% of the total asset under management (AUM) in 2020.

The Life Insurance Association of Malaysia (LIAM), The General Insurance Association of Malaysia (PIAM), and the Malaysian Takaful Association (MTA), which have power over the insurance sector in the country, reiterated the member insurance companies to run during the COVID-19 pandemic. This was required for coverage by the hospital and surgical insurance (HSI), travel insurance, and motor insurance services.

Further, most of the insurance renewals were carried out online to ensure the safety of the customers during the pandemic. The new motor insurance premiums declined during the period owing to the low sales of new motor vehicles in 2020 as well as in 2021 during the first quarter of the year. In 2020, the amount of gross written premiums in the motor insurance sector of Malaysia amounted to approximately 8.4 billion Malaysian ringgit. That year, the motor insurance sector continued leading the general insurance market.

The Malaysia motor insurance market is likely to increase to a value of USD XX billion in 2026 after a phased liberalization development, which switched fixed tariffs for risk-based pricing and remains unchanged in the way insurers operate.

Before 2016, the price of motor coverage was monitored by the Bank Negara Malaysia, the country’s central bank, which would issue lists of fixed premiums and policy wordings insurers were allowed to sell. It allowed market-based pricing of comprehensive and third-party insurance policies besides permitting new product offerings.

In 2019, there were 66 new product launches in motor insurance — the highest among all lines of general insurance business. Moving away from the tariff-based system in motor insurance allowed the introduction of policy pricing set by providers and predicated on customer risk profiles — the same free-market-based system seen elsewhere in developed countries. As a result, there was a decline in the average premium price paid.

The Phased Liberalization of the Motor Tariff has increased steadily momentum since it took effect in 2016, and companies have been constantly introducing new and innovative products to better serve customers and meet their various protection needs. The industry keenly anticipates further liberalization and looks forward to the full market opening.

The country confirmed this by setting fixed premium and takaful (a type of Islamic insurance wherein members pay money into a pool system to guarantee each other against loss or damage.) contribution rates based on the model, age, and cubic capacity of each vehicle.

In 2021, the value of gross written premiums in the motor insurance sector of Malaysia amounted to approximately XX Billion Ringgit. This year, the motor insurance sector continued to dominate the general insurance market. Moreover, motor insurers could look forward to a better business environment as pricing gets completely liberalized.

As required by law in Malaysia, vehicle insurance recorded a contraction of 56% of the overall general insurance Net Earned Premium (NEP) at the end of 2019, which is more than half of the insurance NEP in Malaysia. The Malaysian motor insurance earned premium is expected to increase steadily.

The two main insurance sectors in the insurance sector are fire, and the automobile. Consequently, the auto insurance sector is the largest class in the insurance sector. The increase in new vehicle sales, in both the private and commercial vehicle segments, contributed to the 1.8% growth in motor insurance recorded gross written premium.

The report covers the major key players operating in the Malaysian Motor Insurance Market. The market is fragmented, and the market is expected to increase during the forecast period due to the year-on-year expansion of motor insurance. Many other factors are also driving the market.

• The market estimate (ME) sheet in Excel format
• 3 months of analyst support